Brickwork Ratings upgrades the ratings for the Bank Loan Facilities of Rs. 47.96 Crs. of Atlas Export Enterprises
Particulars| Facilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
|---|---|---|---|---|---|
| Previous | Present | Previous (23 Apr 2021) |
Present | ||
| Fund Based | 0.98 | 7.71 | Long Term |
BWR BB-
/stable Downgrade, ISSUER NOT COOPERATING |
BWR BB +
/Stable Upgrade |
| 40.00 | 40.00 | Short Term |
BWR A4
|
BWR A4 +
Upgrade |
|
| Non Fund Based | 0.25 | 0.25 | Short Term |
BWR A4
Reaffirm, ISSUER NOT COOPERATING |
BWR A4 +
Upgrade |
| Grand Total | 41.23 | 47.96 | (Rupees Forty Seven Crores and Ninety Six lakhs Only) | ||
Brickwork Ratings has upgraded the rating to BWR BB+(Stable)/A4+ from BWR BB-(Stable)/A4; Issuer not cooperating*
The rating upgrade has factored strength from the extensive experience of the partners, prominence of the promoter in the society, well-established clientele and satisfactory track record of operations, comfortable debt coverage indicators and liquidity profile of the firm. However, the rating is constrained by moderate scale of operations in a highly fragmented industry, exposure to forex risks and intense competition in the export industry.
KEY RATING DRIVERSCredit Strengths:
The firm's founder partner Mr.M.Nachimuthu(Chairman of Karur Textile Park Limited and Kongu educational Trust and the President of Karur Exporters Association) has vast experience in the textile and export industry spanning four decades. The firm is in existence for more than four decades with an established track record in the business implies the firm’s ability to sustain with external factors.
The firm is located at Karur, which is a major textile hub. It is well known for the export of Home Textile products. This provides location specific advantages in terms of easy accessibility to raw materials, clientele and availability of labour.
The firm's revenue is primarily derived from exports. The firm has a well-established customer base in UK, USA and Germany. AEE has an operational track record of four decades and established relationships with customers and suppliers. It helps the firm in getting an uninterrupted supply of raw material and repeated orders from customers
Gearing of the firm has improved to 1.15 times in FY20 vis - a - vis 1.40 times in FY19 supported by comfortable networth of Rs.22.43crs.(FY20) The debt protection metrics of the firm are adequate with ISCR and DSCR at 6.52 times and 3.30 times respectively in FY20.
Credit Risks:
The firm’s risk profile continues to remain moderate reflected by modest scale of operations of Rs.171.58crs in FY20 and Rs.164.16crs in FY19. As per provisional FY21,the firm has achieved sales turnover of Rs.214.69 crs. Operating profit margins has marginally declined to 11.81% in FY 2020 to 13.06% in FY 2020 due to increase in raw material prices.
The withdrawal of capital by the Partners for any personal contingency would adversely affect the capital structure of the firm.
The firm derives majority of its revenues through exports, and hence the margins remain exposed to forex fluctuations. The firm hedges its receivables through forward contracts, thereby, mitigating the exchange rate fluctuation risk to some extent.
The textile industry is fragmented because of the presence of several unorganised players with meager capacities. Entry barrier is low due to limited capital and technology requirements and little differentiation in end products. Thus profitability will remain susceptible to fluctuation in raw materials prices.
Going forward, the ability of the firm to improve its revenue and profitability margins, manage its working capital efficiently will remain key rating sensitivities.
Positive: The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement.
Negative: The rating may be downgraded if the revenues go down and profit margins show lower than expected figures.
LIQUIDITY INDICATORS - Adequate
The firm’s liquidity profile is adequate, driven by a current ratio of 1.50 times in FY20. Cash and cash equivalents were at Rs.4.67 crs. Net cash accruals/Total Debt is at 0.50 times and the cash conversion cycle of 35 days as on 31st March 2020. The debt protection metrics of the firm are comfortable with ISCR and DSCR at 6.52 times and 3.30 times in FY20.
ABOUT THE ENTITYAtlas Export Enterprise(AEE) was established in the year 1978 in Karur, Tamil Nadu. It is a partnership firm with three partners namely, Mr. M Nachimuthu, Mr. N Senthil Prasath and Mrs. N Kasthuri. The firm is engaged in manufacturing and exporting home textiles such as bedsheets, pillow covers, window screens, table linens and kitchen linens. The firm is exporting its products to U.S.A, UK, Germany, Switzerland and Spain.
KEY FINANCIAL INDICATORS (Standalone)| Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
|---|---|---|---|
| Operating Revenue | Rs.Crs. | 171.58 | 164.16 |
| EBITDA | Rs.Crs. | 20.26 | 21.43 |
| PAT | Rs.Crs. | 15.78 | 15.19 |
| Tangible Net Worth | Rs.Crs. | 22.43 | 20.00 |
| Total Debt/Tangible Net Worth | Times | 1.15 | 1.40 |
| Current Ratio | Times | 1.50 | 2.86 |
NA
NIL
ANY OTHER INFORMATIONNA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)| Facilities | Current Rating (2021) | 2021 (History) | 2020 | 2019 | 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating | Date | Rating |
| Fund Based | LT | 7.71 |
BWR BB+/Stable
(Upgrade) |
23Apr2021 |
BWR BB-/stable
(Downgrade, Issuer not cooperating) |
27Mar2020 |
BWR BB/stable
(Assigned) |
21Jan2019 |
BWR BB
(Rating Withdrawn) |
NA |
NA
|
| Fund Based | ST | 40.00 |
BWR A4+
(Upgrade) |
23Apr2021 |
BWR A4
() |
27Mar2020 |
BRW A4
(Reaffirmed) |
21Jan2019 |
BWR A4
(Reaffirmed) |
NA |
NA
|
| Non Fund Based | ST | 0.25 |
BWR A4+
(Upgrade) |
23Apr2021 |
BWR A4
(Reaffirm, Issuer Not Cooperating) |
27Mar2020 |
BWR A4
(Reaffirrmed) |
21Jan2019 |
BWR A4
(Reaffirmed) |
NA |
NA
|
| Grand Total | 47.96 | (Rupees Forty Seven Crores and Ninety Six lakhs Only) | |||||||||
BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.
Hyperlink/Reference to applicable Criteria| Analytical Contacts | |
|---|---|
|
Vijayalakshmi R Ratings Analyst Board : +91 044 24663326 vijayalakshmi.r@brickworkratings.com |
Varadarajan R Associate Director - Ratings Board : +91 044 24663326 varadarajan.r@brickworkratings.com |
| 1-860-425-2742 | media@brickworkratings.com | |
| SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | ||
|---|---|---|---|---|---|---|
| 1 | Term LoanOut-standing | 0.54 | _ | 0.54 | ||
| 2 | PC/PCFC/FDB/BRD/FBESanctioned | _ | 40.00 | 40.00 | ||
| 3 | Bank GuaranteeSanctioned | _ | 0.25 | 0.25 | ||
| 4 | Emergency Credit Line Guarantee Scheme (ECLGS)Out-standing | 2.82 | _ | 2.82 | ||
| 5 | GECLSanctioned | 4.35 | _ | 4.35 | ||
| Total | 7.71 | 40.25 | 47.96 | |||
| TOTAL (Rupees Forty Seven Crores and Ninety Six lakhs Only) | ||||||
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